It's Time To Buy This Undervalued Copper Miner


  • Nevsun Resources recently reported its full-year 2016 operational results and expects to provide its 2017 outlook shortly.
  • The company continues to execute on production and maintain a large cash balance, even as it advances its new Timok project.
  • I think Nevsun is undervalued here as the market is not placing enough value on its assets, earnings power and dividend sustainability.

It's Time to Buy Nevsun Resources

Nevsun Resources (NYSEMKT:NSU-OLD) is one of my largest holdings but I continue to add more shares here as I feel the stock is undervalued and not getting the respect it deserves by the market. These feelings have only grown stronger as the stock trades at a low valuation and just released positive operational results for 2016. With a 5% dividend yield, strong earnings and the potential to more than triple copper production in the future with its newly acquired Timok project, I think it's time to buy shares.

Recently, Nevsun reported its operating results for 2016 and I think investors should be pleased with these results despite some short-term challenges with the copper flotation circuit at the Bisha mine. For the full-year 2016, Nevsun says it produced 55.8 million pound of supergene copper, exceeding guidance, with cash costs of just $1.03 per pound sold. The company also achieved its zinc guidance of 90 million pounds produced from primary ore and its gold guidance of 90,000 gold equivalent ounces monetized from stockpiles.

Of course, Nevsun also had other achievements to take note of in 2016. Mainly, the company completed its $365 million acquisition of Reservoir Minerals, obtaining the high-grade gold and copper Timok project in the deal. The move will allow Nevsun to diversify its asset base and expand low-cost production.

As a reminder, at $1,250 an ounce gold and $2.6 per pound copper, this project carries a net present value (post-tax) of $1.28 billion and this does not include an expanded resource and results from a new study that will be coming shortly. Nevsun is now advancing Timok as fast as it can and previously released some outstanding drill results at the Upper-Zone of the project, with these results not included in the current resource

This article was written by

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With over a decade of experience in the investment industry, I am a highly skilled private investor with a proven track record of success in the commodities and hard assets sector. My areas of expertise include investing in gold and silver miners, royalty and streaming companies, pure exploration companies, as well as oil and gas producers and MLPs. My comprehensive understanding of these markets and my ability to identify and capitalize on profitable opportunities have enabled me to consistently deliver strong returns for my subscribers.

Disclosure: I am/we are long NSU. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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